US amends ban to allow companies to work with Huawei for developing 5G standards

June 16, 2020

The United States has announced it has amended the ban on US companies doing business with Huawei. The move entails allowing US companies to share information about technologies with Huawei for the purpose of developing joint standards without requiring an export licence.

US Secretary of Commerce Wilbur Ross said, however, that the change in policy is not a softening on the government’s stance against Huawei, which is still placed on the Entity List. Rather, the amendment was made to ensure US companies are still able to contribute to important standards-developing activities, which Huawei has a strong involvement in, for 5G, artificial intelligence, autonomous, and other technologies.

“The United States will not cede leadership in global innovation. This action recognises the importance of harnessing American ingenuity to advance and protect our economic and national security,” Ross said.

“The department is committed to protecting US national security and foreign policy interests by encouraging US industry to fully engage and advocate for US technologies to become international standards.”

The announcement follows Washington’s recent decision last month to clamp down on Huawei’s semiconductor supply, with companies needing an export licence to sell to the Chinese giant.

North of the border, Canadian telcos have also effectively blocked Huawei out of their 5G network builds by signing deals with the Chinese giant’s rivals instead. The Chinese network equipment provider is also banned in Australia and has not made inroads in New Zealand after GCSB prevented Spark from using Huawei kit in November 2018.

Nokia and Ericsson win 5G contracts in China

Meanwhile, Huawei’s competitor Nokia has been chosen by China Unicom to help build out its 5G standalone network in China. Nokia announced on Monday that it was awarded around 10% of China Unicom’s 5G core network buildout.

The Finnish network equipment provider will help set up connections, provide bandwidth management, scale and secure networks, and open up the 5G network to support new use cases such as network slicing.

The two companies previously entered into an agreement for Nokia to provide its cloud-based vIMS platform for China Unicom’s VoLTE network. Nokia currently has a 17% share in China Unicom’s VoLTE network.

Nokia also announced on Monday it has partnered with Broadcom to develop chips for 5G equipment. It is Nokia’s third such deal, following ones with Intel and Marvell.

The two companies will develop new custom system-on-chip processors that will be integrated into Nokia’s “5G Powered by ReefShark” portfolio and deployed in several of Nokia’s network solutions, the Finnish company said.

Like Nokia, Ericsson announced last week it had won 5G contracts in China, having signed agreements with all three of the nation’s major telcos: China Unicom, China Telecom, and China Mobile. Ericsson did not provide details of the deals.

In announcing its 5G contracts, Ericsson added that it would experience a hit of around 1 billion Swedish krona during the second quarter from asset write-downs of pre-commercial product inventory for the Chinese market.

“The margins during the second quarter of 2020 are expected to be negative due to high initial costs for new products,” Ericsson said.